Vets Get $22 Million to Settle Mortgage Foreclosure Claims

Two national mortgage lenders will pay more than $22 million to settle claims under the Servicemembers Civil Relief Act (SCRA) that they allegedly violated a law meant to insulate military members from illegal foreclosure, according to the Department of Justice.

A Bank of America subsidiary improperly foreclosed on about 160 service members from January 2006 to May 2009, according to allegations in the lawsuit that spurred the settlement. BAC Home Loans Servicing, formerly Countrywide Home Loans, allegedly failed to check the status of military borrowers before foreclosing. The SCRA protects active duty service members from some civil and financial penalties and provides a grace period against foreclosure proceedings.

Parties reached a second settlement with Saxon Mortgage Services, a subsidiary of Morgan Stanley. Allegedly, that firm illegally foreclosed on about 17 service members from January 2006 to June 2009, according to court papers. The company agreed to pay $2.35 million to resolve a lawsuit filed in the Northern District of Texas.

The suit against Bank of America’s subsidiary was filed in the Central District of California, which is where Countrywide maintains its headquarters.

Both companies pledged to compensate any service members who were wrongfully foreclosed upon from mid-2009 through 2010.

“With the numerous sacrifices our service members make while they are serving our country, the last thing they need to worry about is whether or not their families will be forced from their homes,” said James T. Jacks, U.S. Attorney for the Northern District of Texas. “These lenders’ callous disregard for the SCRA, a law which was designed to insulate these patriots from unlawful foreclosures and other civil and financial obligations while they are on active duty, is deplorable and I applaud the Department’s Civil Rights Division’s efforts in identifying and seeking remedies for these wronged service members.”

Some of Countrywide’s victims include military members who served in Iraq and Afghanistan. A few of the homeowners foreclosed by Saxon were severely injured while on active duty or suffer from post-traumatic stress disorder.

As part of the settlements, employees of both companies will be required to attend training sessions regarding the Servicemembers Civil Relief Act.

Military members and military families who believe their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance Program office. Find the one closest to you by visiting http://legalassistance.law.af.mil and click the Legal Services Locator.


About the author: Chris Birk writes about real estate and the mortgage industry for a host of sites and publications, from Lenderama and Bigger Pockets to the Huffington Post and Motley Fool. A former newspaper and magazine writer, he is also content director for a leading VA lender. Follow him on Google+.

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